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Division of Assets

“Health is wealth, let impact on health not wipe out your wealth…Protect your assets, secure your family.”  – Meera Srinivasan

Division of Assets

Division of Assets is a critical concept under Missouri Medicaid law that every married couple suffering through declining health will encounter. The Division of Assets process arises from a 1988 law passed by Congress and commonly referred to as the Spousal Impoverishment Act. The intent of the law was to avoid impoverishing the spouse that does not need Medicaid (referred to as the “Community Spouse”) while still allowing the spouse that does require Medicaid (referred to as the “Institutionalized Spouse”) to obtain benefits.

As part of the law, Congress established limitations on the amount of assets that the Community Spouse is allowed to retain if the Institutionalized Spouse is going to be eligible for benefits. The limits are commonly referred to as the Community Spouse Resource Allowance. For 2018 Missouri allows the Community Spouse to retain somewhere between $24,720 and $123,600. This amount is adjusted annually for inflation and cost of living. Division of Assets is the process used under Missouri Medicaid to determine the actual amount within that range that the Community Spouse will be allowed to keep.

The Division of Assets is calculated on the first day the Medicaid applicant is admitted to a nursing home for at least 30 continuous days. The married couple’s countable assets (which excludes a very limited amount of assets considered to be exempt) are divided into two with each spouse being assigned their respective one-half interest. We are frequently asked if the manner in which the couple’s assets are titled impacts the Division of Assets. The short answer is no, it does not matter which of the individuals own the asset, the couple’s assets are aggregated when determining the Division of Assets. This means the healthy spouse that has significantly more assets will have their assets reduced through this process. Therein is one of the reasons working through this process with an Elder Lawyer is critical to make sure everyone’s interests are protected to the maximum extent of the law. A recent article in the Wall Street Journal indicated that 86% of Widows live below the poverty line as a result of paying for the care costs of their spouse. The practice of Elder Law and proper employment of the Division of Assets should prevent that from happening!

By way of example, lets assume that John and Jane Doe are a married couple with $285,000 in financial assets. Jane has dementia and requires nursing home care. The Medicaid caseworker will divide the $285,000 in financial assets and attribute $142,500 to Jane and $142,500 to John. The bad news is that in order to be eligible for Medicaid assistance, Jane must have less than $2,000 in her name. So, the family will be instructed to spenddown $140,500 of the assets attributed to Jane. Additionally, since the amount awarded to John ($142,500) exceeds the maximum Community Spouse Resource Allowance of $123,600, John will be instructed that he must contribute $18,900 of the assets attributed to him towards Jane’s Medicaid spenddown. In sum, John and Jane Doe are going to be told they must spend 56% of their life’s savings or $159,400 before Jane will be eligible for Medicaid assistance. With a reduction in the Community Spouse assets of that magnitude it is not hard to see how 86% of widows end up living below the poverty line as a result of their spouse’s medical expenses.

If we modify our example slightly and assume that John and Jane Doe were clients of Jones Elder Law who already had the appropriate Elder Law documents in place, the family would not be spending down any of their life savings. There are numerous legal strategies that can be employed to help this family and prevent the state from forcing the spenddown of their assets. The key is having the correct legal documents coupled with the correct legal advice. When a family has both of those in place, they do not have to worry about ending up below the poverty line!

Need help making sure your Division of Assets and Spenddown are handled properly, contact us now about coming in for a complimentary Vision Meeting.

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500 Chesterfield Center | Suite 355
Chesterfield, Missouri 63017
(636) 812 - 2575
Fax: (888) 838 - 1793

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Saint Charles, Missouri 63303
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